The world's biggest smartphone maker by shipments said Friday earnings from its mobile division was flat compared with a year earlier as price competition intensified in the handset market. Its results for the quarter ended Dec. 31 were also pressured by currency fluctuations that hit its earnings by 700 billion won ($651 million) and a special bonus to employees.

"Amid macroeconomic uncertainties such as a strong Korean won and increased concerns over possible quantitative easing tapering in the U.S., our earnings were lower than what the market expected," Robert Yi, head of Samsung's investor relations, said in a statement.

Still, Samsung will continue to spend heavily on capital expenditures, predicting that it will spend close to 23.8 trillion won in 2014 to upgrade its facilities and expand production of memory chips, displays and other consumer electronics. Faced with slowing handset sales and a falling stock price spurred by the company's first operating profit decline in more than two years, the South Korean technology giant has been under pressure to find new ways to impress consumers. After the earnings were released, Samsung shares dipped by as much as 0.6% at one point, before ending the day up 0.6%. The stock is down 5% so far this year.

For the first quarter, the company said it expects demand for smartphones, tablets, televisions and displays will decline because of seasonal weakness, which could pressure its earnings further.

Samsung said net profit for the three months ended Dec. 31 rose 3.7% from a year earlier to 7.3 trillion won from 7.04 trillion won. Growth slowed significantly from the third quarter's 25.6%, as healthy margins from the company's chip unit weren't enough to offset cooling profit momentum for Samsung's high-end Galaxy smartphones. The company also spent 800 billion won for a special bonus to celebrate the 20th anniversary of Chairman Lee Kun-hee's new management strategy. The Korean won strengthened 2% against the U.S. dollar and 11% against the Japanese yen in the fourth quarter, hurting the company's overall earnings.

Operating profit fell 6% from a year earlier to 8.31 trillion won, the first decline in more than two years.

Cellphones and telecom equipment accounted for 66% of Samsung's fourth-quarter operating profit. Operating margin from the division fell to 16% from 17.8% a year earlier. The company has been spending heavily on marketing expenses to promote its new line of smartphones, the Galaxy S4 and the Galaxy Note 3, and its smartwatch. Samsung didn't disclose how much it spent on marketing in 2013, but said it would try to lower the ratio of marketing expenses to revenue this year by better allocating costs.

Samsung said its smartphone shipments fell "slightly" from the third quarter, without disclosing figures, because of inventory adjustments. Analysts estimated that Samsung sold between 85 million and 87 million smartphones during the quarter.

Competition is increasing with main rival Apple Inc. expected to see iPhone shipments increase because of its deal with the world's largest carrier, China Mobile Ltd.

"Samsung must be very careful not to get caught in a pincer movement in China this year between Apple's iPhone at the high end and a long tail of Chinese vendors, like Lenovo, at the low end," said Neil Mawston, an executive director with research firm Strategy Analytics. In the worst-case scenario, he said, strong iPhone demand at China Mobile could knock off 1% from its world-wide mobile phone profits this year. Apple reports quarterly results on Monday and analysts expect iPhone shipments in the quarter through December to have increased more than 10% from a year earlier because of strong demand for the iPhone 5S.

"The biggest growth in the near-term will come from developing markets where consumers are much more price sensitive," said Wayne Lam, an analyst with research firm IHS. "Samsung has more smartphone models that address those price points."

Kim Hyun-joon, an executive with Samsung's mobile unit, said demand for high-end smartphones is expected to increase in China with the adoption of faster fourth-generation wireless technology.

Another headwind for Samsung this year will be a new round of patent litigation with Apple, slated to go to trial in March. Apple is seeking to ban the sale of some of Samsung's latest smartphones and analysts expect the South Korean company to book bigger provisions to cover legal costs and potential damages.

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information.
All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only.
Intraday data delayed at least 15 minutes or per exchange requirements.